MR. GREGORY: But is the exit strategy realistic? Is the worst really over in Iraq? And will an increase of 17,000 U.S. troops in Afghanistan be enough to stop the growing violence there? An exclusive interview with the man who will be charged with implementing the new strategies in Iraq and Afghanistan, the first person to ever serve as secretary of defense under presidents from two different parties, Robert Gates.

Then, President Obama announces a $3.6 trillion budget plan that transforms the role of government.

(Videotape)

PRES. OBAMA: This budget is an honest accounting of where we are and where we intend to go.

REP. JOHN BOEHNER (R-OH): The era of big government is back, and Democrats are asking you to pay for it.

MR. GREGORY: Is the plan a political gamble for the new president? What impact will this massive spending plan have on the economic crisis? And how will the Republican Party structure its opposition against a popular president? Our political roundtable weighs in: chair of the National Democratic Leadership Council, former Democratic congressman from Tennessee Harold Ford Jr.; John McCain's chief strategist during the 2000 presidential campaign, Republican strategist Mike Murphy; White House press secretary during President Clinton's first term and author of "Why Women Should Rule the World," Dee Dee Myers; and host of MSNBC's "Morning Joe," former Republican Congressman from Florida Joe Scarborough.

But first, yesterday evening I sat down with Robert Gates in his first television interview as President Obama's secretary of defense.

Mr. Secretary, welcome back to MEET THE PRESS.

SEC'Y ROBERT GATES: Thank you.

MR. GREGORY: For the first time at Camp Lejeune in North Carolina on Friday, the president talked about a date certain for the withdrawal of U.S. forces from Iraq. This is what he said.

(Videotape, Friday)

PRES. OBAMA: But August 31st, 2010 our combat mission in Iraq will end. I intend to remove all U.S. troops from Iraq by the end of 2011.

(End videotape)

MR. GREGORY: Now, the president talks about the combat mission being over by August of 2010; the idea being that we're currently at about 142,000 troops, that residual force would be roughly 50,000 troops. But those forces left in Iraq will still be in harm's way. There will be some fighting, they will be dying. This war will go on beyond August of 2010.

SEC'Y GATES: They do have a very different mission, but that mission will be principally a training, assistance, advisory role. There will be a limited counterterrorism operations aspect to it, and we will still have some soldiers embedded with Iraqi units as part of, of the training effort. But it's a very different kind of arrangement, and our soldiers will be consolidated into a limited number of bases in order to provide protection for themselves and for civilians who are out working in the Iraqi neighborhoods and countryside as well. So I think that the way General Odierno plans this, the, the risk to our troops will be substantially less than certainly was last year, and it has, has gradually declined.

MR. GREGORY: So that mission then changes with, with a smaller force. How, how do you describe it generally? Is this a situation where U.S. forces are, are standing down and Iraqi forces are finally standing up in that principle position?

SEC'Y GATES: Well, the Iraqi forces already are standing up in a significant way. They basically organized the security for the provincial elections last month and did a very good job. We were in the background, helped them with some planning and so on. But it, but it is a very different kind of mission, and the units that will be left there will be characterized differently. They will be called advisory and assistance brigades. They won't be called combat brigades.

MR. GREGORY: But nevertheless, we say the combat mission is over, U.S. troops will still be in harm's way.

SEC'Y GATES: Yes, but at a very different level than in the past.

MR. GREGORY: Some Democrats, supporters of the president--critics of the war, like the president, who was opposed to the war in Iraq--think that the size of the residual force at 50,000 troops is too big. House Speaker Nancy Pelosi was interviewed on MSNBC this week by Rachel Maddow. This is what she said.

(Videotape, Wednesday)

REP. NANCY PELOSI (D-CA): And I don't know what the justification is for 50,000--a presence of 50,000 troops in Iraq. I do think that there's a need for some, and I don't know that all of them have to be in country. I would think a third of that, maybe 20,000, a little more than a third, 15,000 or 20,000.

(End videotape)

MR. GREGORY: Does this agreement represent, on the part of the president, a concession to his commanders on the ground to keep a larger force than perhaps he originally wanted for fear that the county might come apart without a significant U.S. presence?

SEC'Y GATES: No, I don't think it was a concession. I think that there was a lot of analysis of the risks that were involved. I think that if the commanders had had complete say in this matter that, that they would have preferred that, that the combat mission not end until the end of 2010. And so having a somewhat larger residual or transition force mitigates the risk of having the combat units go out sooner.

MR. GREGORY: Hm.

SEC'Y GATES: So it was really a dialogue between the commanders in the field, the Joint Chiefs here, myself, the chairman and the president in terms of how, how you mitigate risk and how you structure this going forward.

I think the important thing to point out, though, is that the president has said that that will be a transition force of 35,000 to 50,000, and it's a way station. We--as he pointed out, in the absence of any new agreement with the Iraqis we have to be at zero by the end of 2011. So that 50,000 or 35,000 is a way station on the way to zero.

MR. GREGORY: The president did not want to extend that combat mission until the end of 2010 as his commanders wanted. Why not?

SEC'Y GATES: Well, first of all, there were the Joint Chiefs and others who felt that if you look at the risk and, and also you look at the strain on the force and the need for additional forces in Afghanistan, and looking more broadly at, at our forces, there were those in the Department of Defense who were arguing very strongly for the 19-month period. So I think, I think this really was the product of a dialogue between the president and the chiefs and the commanders.

MR. GREGORY: You've always said it's important to be a realist about Iraq. President Bush originally thought that the U.S. would be able to get down to 30,000 troops by September of 2003. Tom Ricks, the author, as you know, of "Fiasco" and now "The Gamble," has covered the Pentagon in this war extensively, said this about the plan to end the combat phase: "I don't think it's going to happen. Why doesn't he [President Obama] just say as they stand up, we'll stand down. He is walking in the failed footsteps of his predecessor, which is being persistently overoptimistic about Iraq." Let's be clear here. Has the president said that if things get worse, if things go bad, that all bets are off? That he would stop the withdrawal?

SEC'Y GATES: What the president has said is that as commander in chief he always remain--retains the flexibility and the authority to change a plan or adjust it if he thinks it's in the national security of the United States. The fact is, I don't think any of us believe that that will be necessary.

MR. GREGORY: But again, it's possible if there's a deterioration, he reserves that right to end the withdrawal.

SEC'Y GATES: I would characterize the likelihood of significant adjustments to this plan as fairly remote.

MR. GREGORY: Fairly remote.

But let's talk about where there are potential flash points in Iraq. People I've talked to say there are three real areas. In the north you've got tension between the Arabs and the Kurds; the prospect of the Kurds, perhaps, trying to split off from Iraq. In Mosul, a large al-Qaeda in Iraq presence. In the south, in Basra, oil-rich area, as you know, militia groups fighting over that oil revenue. In your judgment, what are the prospects of civil war once U.S. forces come out in large numbers?

SEC'Y GATES: Well, first of all, I think it's important to remember we have another 18 months, and we are going to have a substantial force there. I would disagree that there is a, a significant instability in Basra. I think Basra is one of the real success stories from Prime Minister Maliki's offensive down there last year. So I--Mosul is a problem. The Arab-Kurb tensions are a problem. The need to get an oil law is a problem. So, so there are problems. We have the, the concerns associated with a national election at the end of this year, is one of the reasons why General Odierno wanted to keep those troops there as long as possible, or a significant number of troops. So there's no question, we've had a significant military success. There has been real progress on the political side, but there is clearly unfinished business in that arena as well. But we will still be there with a significant presence for another 18 months. And, and as we've seen just over the last six to 12 months, what we have mostly seen is significant progress. And I think most of the people most closely associated with that expect--with Iraq expect that progress to continue.

MR. GREGORY: There is an agreement between the United States and Iraq to pull all forces out by 2011. That's what the president alluded to.

MR. GREGORY: What are the prospects that in fact U.S. forces remain in Iraq beyond that date? Which is possible if you renegotiated that deal, if the Iraqis said please stay.

SEC'Y GATES: It's, it's really not a renegotiation, it would be a completely new negotiation. My guess is it would be at the instigation of the Iraqis, and, and we would just have to wait and see. At this point it's completely hypothetical. We have a signed agreement with the Iraqis that says, that says we have to be out of there...

MR. GREGORY: Mm-hmm.

SEC'Y GATES: ...by the end of 2011, and that's what we're all planning on.

MR. GREGORY: General Odierno, Odierno has said he expects and would want, in fact, U.S. forces there at some level, perhaps 35,000, at least until 2015.

SEC'Y GATES: Well, I, I also have said that I thought perhaps we would need to have troops there beyond that time. That was all--what certainly my remarks were before the SOFA was signed.

MR. GREGORY: Mm-hmm.

SEC'Y GATES: And before we made a commitment to be out of there by 2011. If we're there beyond that, it'll be because of a new agreement and negotiated with President Obama and, and based on what he thinks is in the best interests of our country.

MR. GREGORY: When the United States finally leaves Iraq, will it have achieved victory?

SEC'Y GATES: I think that we have--as I've said, I think we have, have had a significant success on the military side. There is still--the political side is still a work in progress in Iraq. And frankly, I think before you start using terms like "won" or "lost" or "victory" or "defeat," those are the kinds of things that I think historians have to, have to judge. But I think that from the standpoint of the military mission we will have enjoyed significant success.

MR. GREGORY: Is it fair to say that when the U.S. leaves President Obama will not be able to declare either victory or defeat, that it'll be something of a muddle?

SEC'Y GATES: The question is, what kind of position is Iraq in at the time that we pull out? If Iraq is basically stable, if the level of violence remains at the relatively low levels that it is now, if they have had national elections, if they are an ally of the United States, I would call that a substantial success.

MR. GREGORY: I want to turn to Afghanistan and Pakistan. You have said that in fact the greatest military challenge now is Afghanistan. The president has said that he will commit 17,000 additional U.S. troops. This is how you described Afghanistan recently: "This is going to be a long slog," you said, "and frankly, my view is that we need to be very careful about the nature of the goals we set for ourselves in Afghanistan." That was in January. Back in December you said about Pakistan that it is on top of the list when it comes to problems and challenges that the U.S. faces. Now, most of the security risk is posed from that border area between Afghanistan and Pakistan where jihadists and the Taliban are resurgent. In that area, and as you look at the whole picture, what worries you most?

SEC'Y GATES: I think it's the safe havens on the Pakistani side of the border not just for al-Qaeda, but for the Taliban, for the Haqqani network, for Gulbaddin Hekmatyar and these other affiliated groups that are all working together. They're into--they're separate groups, but they're all working together. And, and I think as long as, as they have a safe haven to operate there, it's going to be a problem for us in Afghanistan. After all, 20 years ago I was on the other side of that border as deputy director of CIA fighting the Soviets, and we had the safe haven in Pakistan. And let me tell you, it made a big difference.

MR. GREGORY: Is it sustainable, this policy of covert operations targeting the Taliban and other jihadists through covert measures, at a time--and doing so, as I say, through covert measures at a time when, when the Pakistani leadership thinks it's destabilizing the country?

SEC'Y GATES: I'm not going to get into any intelligence operations. I will just say that I think that the key here is our being able to cooperate with and enable the Pakistanis to be able to deal with this problem on their own sovereign territory. I believe, based on my talks with the Pakistanis here in Washington this week, this past week, that, that they have--they clearly now understand that what's going on up there in that border area is as big a risk to the stability of Pakistan as it is a problem for us in Afghanistan.

MR. GREGORY: The, the overall consequence--the trouble and consequences of, of jihadists making significant gains in either Afghanistan or Pakistan is perhaps more acute in Pakistan given its nuclear potential. True?

SEC'Y GATES: Well, as long as we're in Afghanistan and as long as the Afghan government has the support of dozens and dozens of countries who are providing military support, civilian support in addition to us, we are providing a level of stability in Afghanistan that at least prevents it from being a safe haven...

MR. GREGORY: Mm-hmm.

SEC'Y GATES: ...from which plots against the United States and the Europeans and others can be, can be put together. So that border area, particularly on the Pakistani side, is, is the most worrisome

MR. GREGORY: Let me ask you specifically about Afghanistan. Former Secretary of State Henry Kissinger wrote in The Washington Post Thursday about what the U.S. strategy has been up until now: "To create," he says, "a, a central government, help it extend its authority over the entire country and, in the process, bring about a modern bureaucratic and democratic society. That strategy cannot succeed in Afghanistan." How does the strategy have to change in Afghanistan?

SEC'Y GATES: I--first of all, we're reviewing exactly that in the administration right now. That's what the Pakistanis and the Afghans were in town for was to participate in that review. We're talking to the Europeans, to our allies, we're bringing in an awful lot of people to get different points of view as we go through this, this review of what our strategy ought to be. And I often get asked, well, how long will those 17,000 be there? Will more go in? All that depends on the outcome of, of this strategy review that I hope will be done in a few weeks.

MR. GREGORY: Let me turn to Iran. David Sanger from The New York Times in his book "The Inheritance" talks about the legacy of the Iraq war with regard to Iran, and he writes this: "It may turn out that one of the great post-Iraq paradoxes was that in crying wolf about Iraq, the American intelligence community found itself unable to raise the alarm about Iran." And his point is there were no weapons of, of mass destruction in Iraq, and yet Iran has been able to progress with a nuclear capability short of, of a nuclear bomb but with kind of a virtual bomb, which is just being on the brink of having an actual weapons stockpile. The question is this: Is it possible to get Iran to abandon its weapons program short of some kind of grand bargain? In other words, bigger carrots and bigger sticks?

SEC'Y GATES: Well, first of all, I don't think that whatever one--however one might criticize the war in Iraq, I don't think that either the last administration or the current one have been distracted from the growing problem with Iran and its nuclear program in the least over the last number of years. We worried about it well before even the Bush administration. So I, I think that there has been a continuing focus on how do you get the Iranians to walk away from a nuclear weapons program? They're not close to a stockpile, they're not close to a weapon at this point and so there is some time. And the question is whether you can increase the level of the sanctions and the cost to the Iranians of pursuing that program at the same time you show them an open door if they want to engage with the Europeans, with us and so on if they walk away from that program. Our chances of being successful, it seems to me, are a lot better at $35 or $40 oil than they were at $140 oil because there are economic costs to this program, they do have economic challenges at home.

MR. GREGORY: You do see the need, though, for a--some kind of strategic relationship between the U.S. and Iran?

SEC'Y GATES: Well, I think that--that's really up to the Iranians. I've been--as I like to say, I've been in this search for the elusive Iranian moderate for 30 years. I'm still looking.

MR. GREGORY: We've got a few more minutes, and I want to go through as quickly as we can some other really important topics. The first is Mexico, a major threat on the border with Mexico because of a widening drug war there. The Economist magazine wrote this startling synopsis, and they call it "Who's in charge? The police chief in Ciudad Juarez, on Mexico's border with America, resigned after drug gangs, who had murdered his deputy, threatened to kill one of his officers every 48 hours until he quit." What's going on there, and how big of a national security threat is this for the U.S.?

SEC'Y GATES: Well, I think that what is important is that President Calderon of Mexico, perhaps for the first time, has, has taken on the battle against these cartels. And because of corruption in the police and so on, he sent the federal army of Mexico into the fight. The cartels are retaliating. I think we are beginning to be in a position to help the Mexicans more than we have in the past. Some of the old biases against cooperation with our--between our militaries and so on I think are being set aside.

MR. GREGORY: You mean providing military supporting?

SEC'Y GATES: Providing them with, with training, with, with resources, with reconnaissance and surveillance kinds of capabilities; but just cooperation, including in intelligence. But it clearly is a serious problem, and, and--but what I think people need to point out is the courage that Calderon has shown in taking this on, because one of the reasons it's gotten as bad as it has is because his predecessors basically refused to do that.

MR. GREGORY: The global economy. Director of national intelligence Dennis Blair said in fact that the global recession and economic turmoil and instability had outpaced terrorism as the most urgent threat facing the United States. What's your assessment?

SEC'Y GATES: Well, I wouldn't disagree with that. I think that they're both very real. But the global economy is clearly a much broader kind of threat to international stability and international cooperation. Terrorism is a much more, I think, limited and defined threat. They're both real. The economic threat clearly affects many, many more people and countries.

SEC'Y GATES: That's a good question. That's not entirely clear. As I said in the last administration, for the first time in American history you had secretary of state and secretary of defense both with doctorates in Russian history, and we didn't have a clue with what was going on. I, I, I personally believe that the Russians are trying to come back from what they considered the ultimate humiliation of the collapse--not only of the Soviet Union, but of the Russian empire. And, and I think Prime Minister Putin feels this more acutely than Medvedev. Maybe it's an age thing. But he is clearly determined to assert Russia's role as a key international player and as, as a country that can block anything that it doesn't like. And, and in many areas if we don't go through Russia, they won't cooperate with us. So I think Russia's a real challenge. I think like the vice president said in Munich at a security conference, there is a chance to reset the relationship because there are a number of areas where we have common interests. For example, arms control. So I think we'll be looking at that, we'll be looking for opportunities to see if we can make some progress with the Russians. But, but it's been tough.

MR. GREGORY: How long will you stay as secretary of defense under President Obama?

SEC'Y GATES: Well, I think that's probably up to the president.

MR. GREGORY: In your mind, though, would you stay for his entire first term?

SEC'Y GATES: That would be a challenge.

MR. GREGORY: Do you have a date certain in your mind of when you'd like to go?

SEC'Y GATES: No.

MR. GREGORY: There's some thought you might stay maybe a year and a day, and that's it.

SEC'Y GATES: No date in mind.

MR. GREGORY: What's the difference between working--what's different between working for President Obama vs. President Bush?

MR. GREGORY: Is that a book you're planning on writing? Are they different presidents? Do they have different styles, different temperaments?

SEC'Y GATES: Oh, sure.

MR. GREGORY: What's the major difference to you?

SEC'Y GATES: I--that's--it's really hard to say. I think that, I think that probably President Obama is, is somewhat more analytical, and, and, he makes sure he hears from everybody in the room on an issue. And if they don't speak up, he calls on them.

MR. GREGORY: A marked difference from his predecessor?

SEC'Y GATES: President Bush was interested in hearing different points of view but didn't go out of his way to make sure everybody spoke if they hadn't, if they hadn't spoken up before.

MR. GREGORY: Secretary Gates, we look forward to reading that book and talking to you about it. Thanks for being here.

MR. GREGORY: Our roundtable weighs in on a busy political week--the budget, the future of the Republican Party and more--after this brief station break.

(Announcements)

MR. GREGORY: We are back and we are joined now by Harold Ford Jr., Joe Scarborough, Dee Dee Myers and Mike Murphy.

Welcome, all of you.

Well, here it is. It's not a, a big document for $3.6 trillion, but it is a significant document. "A New Era of Responsibility: Renewing America's Promise." And this is no ordinary budget. This is how David Leonhardt described it in The New York Times this week: "The budget that President Obama proposed is nothing less than an attempt to end a three-decade era of economic policy dominated by the ideas of Ronald Reagan and his supporters. ... More than anything else, the proposals seek to reverse the rapid increase in economic inequality over the last 30 years."

Joe Scarborough, tax increases and a real focus on, if you like, wealth transfer from the wealthy to the middle class.

MR. JOE SCARBOROUGH: If you like wealth transfer, this could be great.

MR. GREGORY: Yeah.

MR. SCARBOROUGH: The, the thing though is I keep hearing people saying that this is a bold step forward, it is a new direction. I think, as a fiscal conservative, it's more of the same. For people to say that George Bush didn't engage in stimulus spending over the past eight years--I would say reckless spending--when you had two wars, tax cuts, a $7 trillion Medicare drug benefit plan and, and the biggest increase in domestic spending since LBJ, they--the Bush administration was about as reckless as it got. So to say that we're turning the page and we're actually going to double what George Bush did or triple what George Bush did doesn't seem like a new direction to me.

MR. GREGORY: But, but, Mike Murphy, there is a fundamental shift here in the approach that Washington has basically been governed by for 30 years.

MR. MURPHY: Oh, it's an absolute earthquake ideologically. I mean, he was elected not--he didn't only win the election, in the House and Senate he has almost unstopped power. I mean, Republicans now are as close to irrelevant in Washington as we've been. We're kind of like eunuchs invited to a wild party at the Playboy mansion, you know. We get to watch, we have very detailed opinions about everything, but we're not participating. The problem is it allows him to lurch ideologically with tremendous speed.

And what bothers me about this is--as a fiscal conservative I don't like the policy, but we, we lost the election. OK. I hear all this talk about responsibility and sacrifice, but this thing massively increases public debt from about 8 trillion to 15 over 10 years, and it's all going to be paid for by the mythical rich who already pay that 5 percent, 62 percent of the taxes. So fine, I say, raise all their taxes. But I think everybody over about $50,000, if we're going to go into a big spending new French republic of America with a huge public sector, should pay a little more taxes. Get everybody to buy into this.

MR. GREGORY: Right.

MR. MURPHY: Because it is a huge shift in the size of government.

MR. GREGORY: Let's break down some of the, the tax increases from more of a conservative point of view, as reported by the New York--excuse me, by the LA Times this week. "Brian Riedl," the coverage--the article points out, "a budget analyst at the Heritage Foundation, says `Obama's plan amounts to an unfair redistribution of the tax burden.' He said that the top 20 percent of taxpayers now pay 80 percent of all taxes collected by the government. And 40 percent of households pay no income tax. Under President Obama's plan, he said, the top 20 percent of tax filers would pay 90 percent of all taxes, and the number of families who owe no tax would climb to near 50 percent."

The question, Dee Dee, is in this kind of economic crisis--the Obama administration says there's no tax increases till 2011; nevertheless, is this what you do in the middle of a recession?

MS. DEE DEE MYERS: Well, the--like--as you just stated, the tax increases don't kick in until 2011 theoretically, at which time the Obama administration's projections are that we'll be back on a path toward pretty robust growth. There's some question as to whether those projections are actually going to hold up, whether we will actually be growing at a 3 or 4 percent rate by the time it's...

MR. GREGORY: Yeah. I don't know that there--anybody's saying there'd be robust growth by that point.

MS. MYERS: And so that raises some, some interesting questions. But Obama's working very hard to keep his promise, which is not to raise taxes on the 95 percent of, of middle and working class and lower class taxpayers.

MR. GREGORY: Yeah.

MS. MYERS: Can he pull this off without going back on that at some point and sharing the sacrifice more broadly?

MR. MURPHY: Because he has to pay for it with massive debt. That's the dishonest part about it.

MR. GREGORY: And we're going to get into that in a minute. Yeah. But...

FMR. REP. HAROLD FORD JR. (D-TN): Let's put some of this in perspective.

MR. GREGORY: Yeah.

REP. FORD: In 1980, the top 1 percent of earners in the country controlled about 8 percent of the total economic pie in the country. Twenty-six years later, the top 1 percent now controls almost a quarter of the nation's total economic pie.

Two, back in 1993 when Bill Clinton passed his first budget, there were cries that if indeed it went through, the tax increases on the top earners in the country would cause a massive redirection of wealth from investment in the country, it would cause people to lose jobs, it would cause the government to run debt. As a matter of fact, the exact opposite happened. I remind people that no Republican, not one in the House voted in favor of that budget.

MR. SCARBOROUGH: No, you're not. You--in the 1990s there was a leveling wind that was called the Republican Congress in 1995. And I say this time and time again about this current crisis, this is what concerns me. You had Bill Clinton who loathed those of us that were in the Congress. Congress loathed Bill Clinton. But you know what, at the end of the 1990s it worked. We balanced each other out.

REP. FORD: But...

MR. SCARBOROUGH: We had the best of Clinton economics, the best of Republican economics.

REP. FORD: But the--but...

MR. SCARBOROUGH: Hold on. The economy exploded and our economy was only 18 percent of GDP. That was conservative leadership from Republicans and Democrats.

REP. FORD: The same complaints that come today came then, that we would find ourselves in a position a few years down the road where government would be, government would be too large, that somehow or another people would not invest in the country.

MR. SCARBOROUGH: Well, Harold, Republicans balanced that out.

REP. FORD: The reality is that this is the most--this budget, whether you like it or not, is a totally different construct. This budget believes that government has a constructive, positive and even practical role in, in trying to not only correct markets but redirect them...

REP. FORD: But you can't have it that--you can't have it every which way.

MR. SCARBOROUGH: ...or that Barack Obama's been making.

REP. FORD: You can't have it every which way.

MR. GREGORY: All right.

MR. MURPHY: (Unintelligible)...that's the difference. This is so big. I mean, we're quasi-nationalizing the auto companies. We're taking the, the federal debt in the next 10 years greater than the total federal debt of the history of the country, and we're paying for it by taxing the people who pay 62 percent of the taxes now, that 5 percent, which still is not nearly enough. It's, it's--that's what's dishonest about this. If we're going to build a French republic of a public sector that big, let's be honest with the American people...

REP. FORD: Obama has said he's not going to take us down the same path we've gone the last eight years. We--the--in November voters said, "We want a different path." If it doesn't work, he's indicated, "I own this budget. I own this economy, and we may have to go in and get...(unintelligible)..."

MR. MURPHY: (Unintelligible)

MR. SCARBOROUGH: (Unintelligible)

MR. GREGORY: Let me, let me get in here. I want to, I want to challenge another assertion in this budget, and that is that the president has said that he has identified $2 trillion in spending that he will cut back. He will cut $2 trillion in programs. Again, the LA Times reported this week, is that really going to happen? This is the piece: "For all the talk of fiscal responsibility, Congress is not ready to mend its free-spending ways. Exhibit A: The House passed a huge spending bill left over from the last year that increased expenditures by 8 percent. And it's laden with thousands of pet projects." The president's not happy about that, by the way.

Here's Judd Gregg, the senator from New Hampshire--was going to be Commerce secretary, decided he didn't agree with the president well enough. He says this: "The $2 trillion in savings touted by the president is a hollow number based on tax increases and reduced war funding. Where is the spending restraint? Instead, government spending continues to grow and expand, while the economy continues to suffer."

Dee Dee, in this budget, $600 billion as a down payment to get to that goal of universal health care that was first initiated under President Clinton's administration.

MS. MYERS: Right, and that's not all. I mean, that--this is a trillion-dollar program...

MS. MYERS: ...so Congress is going to have to identify additional sources of funding. But what the president has said is we cannot fix this economy, we cannot have long-term sustainable growth in--unless we fix some of the big problems, starting with health care. He said that throughout the campaign, he said he was going to do it. Now he's not only taking on the economy, but he's restructuring it by fixing health care, by switching to an--a green and a foreign oil free energy policy and by fixing education. We know we can't be competitive unless we fix those things. And so he's gambling. He's going to say, try to do it all at one time. It's a, it's a huge hill.

MR. MURPHY: There's a, there's a huge leap of faith from the White House speech writing room when we hear words like "fix." To the pol--you know, whether this'll fix anything, you're right, the numbers are bad because it does assume a lot more economic growth than almost any economist. Six hundred billion dollars is a nickel payment on what a massive health care redo will cost. And his defense spending assumes a peaceful and happy world where we can get way back from what it's been like over the last five years to the low levels of the early Clinton administration. So there's a lot of pie in the sky numbers here.

I will give him some credit, though. Cutting the Medicaid for--or Medicare for wealthy people means testing entitlements. He's right, we should do it. Cutting some of these ag subsidies. But this thing is very low on spending cuts and very high on phony rhetoric about future revenue, and it's sad because I--it's the beginning of Barack Obama turning into just another politician--this time of the left, not of the right--which is a huge mistake for him because there's so much invested in this guy.

MS. MYERS: (Unintelligible)

MR. GREGORY: Where--but here--where are the cuts? Where are the cuts? We have seen in the stimulus bill, people in the White House will acknowledge that the appropriators, the Democrats in--especially on the House side wrote some of the spending into the stimulus bill. It got away from the White House. We have now an omnibus spending bill that appears to have gotten away from the White House. Can he get these cuts of $2 trillion?

MR. SCARBOROUGH: No. And, and this is what's so disappointing is the, the one thing that I really was heartened by that this White House has done over the past month is talk about entitlement reform. If you talk to, talk to people who really understand the economy, understand our budget process, that's the real challenge. Nancy Pelosi and Harry Reid said we're not going to do that. There aren't tough choices being made. And when--if you want to talk about phony, look at all the congressmen who are lecturing bankers every day because they didn't take care of their balance sheets over the past eight years. Look at what they're doing, they're spending seriously. It is as reckless as it's ever been and it, it's not a false choice that Barack Obama puts out there. It's not a choice of doing absolutely nothing or spending more money than we've ever spent before. There should be a middle ground. But the balance sheets are going askew. They're trying again to do what bankers tried to do and Wall Street tried to do over the past eight years, suspend the basic rules of arithmetic.

MR. GREGORY: Harold, the deficit, the debt picture, talking about a reality check here, this is how The Washington Post reports in terms of what we're looking at: "The numbers in the new budget are unlike anything the country and its elected leadership are used to dealing with. Not only will the current deficit reach $1.75 trillion," that's 12 percent of GDP, "next year's will also top a trillion dollars and the deficits will remain about $500 billion until fiscal year 2019." Will Congress simply choke on the size of those numbers? The promise is to cut the deficit in half by the end of the first term. Realistic?

REP. FORD: If he doesn't, he will pay a political price. Remember, much of what he's put forward in--hopeful that the Congress will pass and negotiate with him is, is--revolves around two things, jobs and housing. How do we create more jobs and create more growth and opportunity? Some people call it tax increases, other people call it investment in, in places that will allow the economy to grow: innovation in energy, innovation in health care and even how we teach kids, and investment in the country going forward, particularly in infrastructure and at the state and local level. If this works, it will get the economy moving again. If it does not, the president will have to answer these questions a year and a half from now. I applaud him for taking the risk. It'd be easy to say we're going to do things as usual. I, I, I part with my friend Joe in this regard. Some of the spending is enormous, but I would ask any who oppose, what direction or what alternative do we have? The global economy--global economies around the globe have slowed. The contraction in Europe, South America and Asia have forced us to do things that we've not been accustomed to doing in this country. We've run debt, but not like we're going to run. If this gamble pays off, the president will make the country stronger, more profitable and more prosperous. If it doesn't, he'll have to answer to voters' questions next November.

MR. GREGORY: The president, the president also...

REP. FORD: And Mike and Joe may be right.

MR. GREGORY: He's also spoiling for a fight. His radio address Saturday really summed that up. Listen.

PRES. OBAMA: I realize that passing this budget won't be easy. Because it represents real and dramatic change, it also represents a threat to the status quo in Washington. I know these steps won't sit well with the special interests and lobbyists who are invested in the old ways of doing business, and I know they're gearing up for a fight as we speak. My message to them is this: So am I. The system we have now might work for the powerful and well-connected interests that have run Washington for far too long, but I don't.

(End videotape)

MR. GREGORY: Dee Dee, he's saying, "Bring it on."

MS. MYERS: He's saying, "Bring it on." There was a little bit of "you want a piece of me?" in the tone of, of, of that comment. And he knows this is going to be a fight, he's not shying away from it. He knows he has a couple things going for him, particularly...

MR. SCARBOROUGH: Who, who's going to fight him? That's like me going up to a seven-year-old and saying, "I know this fight is not going to be easy."

MS. MYERS: Well...

MR. SCARBOROUGH: He's going to pass this overwhelmingly. It is going to be easy.

REP. FORD: (Unintelligible)

MR. MURPHY: (Unintelligible)...two reasons.

MS. MYERS: Well, it--no--I, I--look, there's Democrats in Congress who have problems with different provisions and there's Republicans in Congress who have problems with different provisions, and putting it together in a way that meets his goals is, is not going to be--it's not a slam dunk. This is going to be a process.

MR. MURPHY: The, the idea--it's just such a framing trick, though, that he's going to go take on the lobbyists and business as usual in D.C. A bunch of business as usual in D.C. and a whole army of lobbyists are on his side of this.

MS. MYERS: Yeah.

MR. MURPHY: He's got every labor lobbyist in town...

MS. MYERS: That's a big change, though.

MR. MURPHY: Yeah. No, no, there's a massive...

MS. MYERS: That's a big change for Democrats.

MR. MURPHY: ...Barack, left, bigger government lobbying army that's, that's--can hardly wait to turn us into France with the public sector's co-pay.

MR. SCARBOROUGH: Well, even the U.S. Chamber of Commerce has, has been supporting Barack Obama through that stimulus package. This is--again, what he's having to do now, though, is he's having to frame this, he's having to try to remain the outsider when he owns this town. You know, I always used to say in politics nobody stops you if you're going 90 miles an hour. Barack Obama has to continue to seem like the outsider that's going 90 miles an hour fighting the establishment when he is the establishment. He owns this town, he owns this government, he gets whatever he wants.

REP. FORD: I differ a bit in this regard. I think, to Dee Dee's point, he will have to take on some Democratic interests. I was a Blue Dog member in the Congress. There will be some resistance around some of the spending. And even as recently as last week some of my former colleagues expressed concern about the cramdown provisions forcing banks to modify, modify some of the home, home loans that exist. Two, he will have to fight some of the Democratic business lobbyists here in this town, some of the ag lobbyists. Kent Conrad even indicated that some of the, the rhetoric the president used in his State of the Union around agriculture and some of the subsidies there, that he has some concerns about that. Max Baucus even indicated that charitable deduction reductions that the president is offering as--or I should say that came out of his tax package is going to--they're going to have to be reviewed and might have to be modified. So for the president to make the comments he did, it was--had a little bit of a "bring it on" kind of a...

MR. GREGORY: Mm-hmm.

REP. FORD: ...a Pittsburgh Steeler kind of approach to the Super Bowl. But at the same time, this president is making it clear to Washington "I'm ready to fight for my priorities."

MR. GREGORY: Let's talk about Republicans, because one of the, the--and Stephen Hayes does it in the Weekly Standard, points out what the strategy has been so far for Republicans, which is to not go after President Obama specifically. He writes, "This has been the Republican strategy since Obama took office: Refrain from criticizing the president directly, praise his stated desire for bipartisanship; trash congressional Democrats as irresponsibly liberal and poor stewards of taxpayer dollars; offer alternative solutions to the country's problems even if the media pay them no attention. The reasons for doing this are plain. The country was broadly enthusiastic about Obama's inauguration, and his popularity remains high." How high, you ask? Well, look at the numbers. New Washington Post/ABC News poll, a 68 percent approval rating. The president's got some juice right now. But here was Rush Limbaugh at the CPAC conference. This was the Conservative Political Action Conference in Washington this week. Here's what he had to say about the president.

(Videotape, Saturday)

MR. RUSH LIMBAUGH: What is so strange about being honest and saying I want Barack Obama to fail if his mission is to restructure and reform this country so that capitalism and individual liberty are not its foundation? Why would I want that to succeed?

(End videotape)

MR. GREGORY: The question, Mike Murphy, is are these principled objections, ideological differences about the role of government? Or is this calculation? And, and are Republicans open to the idea of hey, this is--as Warren Buffett said, this is Pearl Harbor for the economy. This is like during the Iraq war, Americans have to come together here of all parties and all stripes.

MR. MURPHY: Right, sure. No, Republicans want the country to succeed, though we have a legitimate conservative-liberal ideological fight with the people in power right now. So our job is to be a constructive opposition when we make our ideological case, but we don't be simply obstructionists for its own sake. It's also a little bit academic because the truth is, as I said earlier, most of the power is Democratic. And I think the real issue for the Republicans is we have to step back now and figure out how we modernize conservatism for this century. And you know, we're kind of like--it's like Russia 1920. We've got a lot of warlords running around, each with an armored car and 50 troops. You know, Rush is one of them, there's Newt.

MR. GREGORY: Yeah.

MR. MURPHY: All these guys. It's the nature of it. And they're going to, they're going to go out and--and it's all right, it's a constructive discussion. But in the--at the end of the day here's the one statistic we all got to remember: the country's changing. Ronald Reagan won in 1980 with 51 percent of the vote. We all worship Ronald Reagan. But if that election had been held with the current demographics of America today, Ronald Reagan would've gotten 47 percent of the vote.

MR. GREGORY: Mm-hmm.

MR. MURPHY: The math is changing. Anglo vote's 74 percent now, not 89. And if we don't modernize conservatism, we're going to have a party of 25 percent of the vote going to Limbaugh rallies, enjoying every, every applause line, ripping the furniture up. We're going to be in permanent minority status.

MR. GREGORY: Joe, how do Republicans constructively oppose this president, hold his feet to the fire, act as a constructive opposition party?

MR. SCARBOROUGH: Well, they do what Republicans did, what conservatives did in 1993. The reason I ran in 1994 was very simple. When Bill Clinton put that budget plan out that I loathed, I turned on C-SPAN, a lot of people were tuned in, and we watched John Kasich say, "We don't like Bill Clinton's plan. Here is our budget plan." And I sat there and I watched him talk about an alternative choice. That's what this Republican Party has to do right now. They can't just say no, with, with apologies to Rush Limbaugh. They have to come up with a constructive plan.

Here's the problem, though. Republicans owned Washington for the past eight years. They failed miserably. The people that were running the Republican Party for the past eight years on Capitol Hill still seem to be running the Republican Party on Capitol Hill. So I, I wonder if Americans really are going to look in that direction for a new change.

MS. MYERS: Right. Big problem is they don't have any leaders, they don't have an opposition program and they're afraid to take on President Obama directly. This was something that we faced in 1994 from the other end. You know, we, we came up with a strategy for fighting back against Newt Gingrich and the rising Republican revolution by saying we're going to take on Reaganomics, but we're not going to take on Ronald Reagan. We're never going to mention President Reagan by name, but we're going to go after Reaganomics. It failed. You have--you know, you can't separate the person from the program when somebody's as popular and high profile as the president.

MR. MURPHY: I agree with that. There's one glimmer of hope, though, and it's a huge glimmer. I thought Obama was going to go to the center and wipe us out. He's going left. That gives us a huge opportunity to rebuild conservatism in a positive way, if we're smart.

MR. GREGORY: And as--Harold, do you agree with that? Do you think he--it appeared that he'd more centrist. Has he gone left with this budget, particularly?

REP. FORD: I don't think so. If, if you think about it, what other direction could he have gone? If he had gone the way that some suggested, some are suggesting here, it would've been perceived as a slap in the face of the 53 percent of Americans who voted for him. Clearly, if those numbers are right we've seen on the screen, 68 percent of the Americans approve of the direction he's headed, 50 percent approve of the direction the congressional Dems are headed, the country is ready for a different--Mike, you said it well. The demographic changes, maybe the country is ready to go in a different direction. And if this direction proves to land us in an era of prosperity and responsibility, as that document states...

MR. GREGORY: Mm-hmm.

REP. FORD: ...the president will win. He has indicated he owns this economy, owns this budget and will have to answer for it in a year and a half.

MR. MURPHY: He, he, he is, he is betting the most beautiful franchise in politics right now on the politics of 1980s France, which I think is going to prove to be a huge mistake.

MR. SCARBOROUGH: I'm sorry. We've been down this road before, it doesn't work. And he had a chance to go to the middle.

MR. GREGORY: No.

MR. SCARBOROUGH: That's what Republican strategists like Mike Murphy and I were the most concerned about.

MR. GREGORY: Right.

MR. SCARBOROUGH: Not a Republican strategist, but we were concerned if he went to the middle, if he brought enough Republicans along with that first budget out, outline that he sent to the Hill that Nancy Pelosi said "No, you're not going to do it," he would've crippled the Republican Party.

REP. FORD: Can I say, David...

MR. GREGORY: Real quick, because I want to get to these...

REP. FORD: David, when Rush Limbaugh made the comment about how he's rooting against...

REP. FORD: ...Barack Obama because, he said right after that, because Democrats rooted against George Bush. Remember, a hundred Democrats in the House supported President Bush in his effort to go to war, a majority of Senate Democrats supported him. No Republican in the House and only three in the Senate--as much as we are concerned about this, and we can debate the finer points of whether this is a different direction or not, almost 60 percent of the Senate is Democrat, 250 Democrats in the House. This president has a responsibility to move this country in a new direction.

MR. GREGORY: All right.

REP. FORD: Whether we like it or not...

MR. GREGORY: I want...

REP. FORD: ...it will be determined in large part by what happens next November.

MR. GREGORY: I want to talk about the government's role in bailing out this economy. And we keep a running tab here of federal bailout and stimulus spending since February of 2008. And I want to put it on the screen and, and have everybody absorb this. The total is $2.3 trillion. Let's go through it. The first stimulus in February of 2008 was $168 billion, money for Fannie Mae and Freddie Mac, and all, all of which has been drawn down, including the latest $400 billion. AIG, the insurance company, $150 billion, probably more to come. The financial bailout, both ends of it--$350, $350--$700 billion, some of that for the auto bailout. Bank of America and Citi got $45 billion each, now the government's going to come in and take 40 percent of Citi. The Obama stimulus package, $787 billion. The housing plan, $75 billion. That's $2.3 trillion. Seven hundred and fifty billion dollars additional in this document for additional bailout money for the banks.

Meantime, what metric do we have to see how people--what people think of that government intervention? The Dow is one metric. It closed on Friday at its lowest level since 1997, just over 7,000.

Harold, has the president yet done a good job persuading Americans to be confident about the future of this economy?

REP. FORD: The Dow is an indicator. It's down 19.5 percent for the first two months of the year, the worst in its 113-year history. The president has some work to do. I think that Secretary Geithner had a tough, a tough last two weeks as he tried to outline where we were going. They will get it right here in the next two weeks. If they don't, they will, they will have to make a, a massive change, because it's clear investors and others are very concerned about the direction that we're headed.

Now, Christine Romer, the, the chief economist in the White House, indicated that as we--first quarter's going to be very, very difficult. As we get later in the year, that stimulus package will work its way through. In large part, what I'm trying to say here today, if this works the president will find himself in a stronger position at the end of the year, beginning of next, to do some different things. If it does not, that metric that you point to...

MR. GREGORY: ...I just want ask this question, which is--and I think it's a fundamental question. If you look at those numbers of how much the government's spending, will the American people continue to support this president even if he fails in some of these efforts to revive the economy?

MR. SCARBOROUGH: No, they won't.

MS. MYERS: No.

MR. SCARBOROUGH: And, and they won't. And here's the thing that bothers me with what I've heard from my good friend Harold, and we are good friends. But he said, "Well, if it doesn't work, you know, in 2010 Republicans will take over." Yes, and we will have added $4 or $5 trillion more dollars to our national debt. We were already at $12 trillion because of Republican recklessness. We will add $5 or $6 trillion more over the next decade because of Democratic recklessness. And yes, so maybe Republicans win in 2010.

MR. GREGORY: Mm-hmm.

MR. SCARBOROUGH: But what does that do to the long-term economy of this economy?

MR. MURPHY: The great irony, all the Democratic talk about recklessly rushing into Iraq without thinking, stopping and thinking it through; they're making the same mistake now with massive economic spending.

MR. SCARBOROUGH: And, and for the record...

MR. GREGORY: All right.

MR. MURPHY: We got to slow down, slow down and think it through.

MR. SCARBOROUGH: ...go back and look at what House Republicans said about...

MR. GREGORY: More, more of this, by the way, coming up on our Web extra, our Take Two. Thanks very much, we'll be right back.

(Announcements)

MR. GREGORY: We're going to have to continue our discussion with our roundtable online, and ask them some questions that our viewers have submitted via e-mail and Twitter in our MEET THE PRESS Take Two Web extra. Plus, read an excerpt from Dee Dee's book, a terrific book, "Why Women Should Rule the World." Also, look for updates from me throughout the week. It is all on our Web site at mtp.msnbc.com.

That's all for today. We'll be back next week. If it's Sunday, it's MEET THE PRESS.

In a highly-anticipated speech to Congress Tuesday, Israeli Prime Minister Benjamin Netanyahu argued that a potential nuclear deal being negotiated by major powers including the United States "paves Iran's path to the bomb."